I noticed recently that AGL have a ‘Solar Savers’ plan offering 20 c/kWh credits for solar fed into the grid. Then I had a thought, I wonder what that means for payback of solar for those with little daytime demand?
So I thought I would do some analysis to see and share for feedback.
The deal is for customers with max 10kW of solar, and includes a $50 credit if you sign up online.
Via our Rooftop Solar Bulk Buy 3, 10kW with Trina Panels and Fronius inverter is $10,625. You would have to have just under 10kW, so 32 No. 305 Watt Trina panels. I think an inverter lower than 10kW would also be beneficial financially, say 8.2kW. But we would always recommend consumption monitoring for an additional $600. So, after 1 less panel and lower capacity inverter, let’s call it $10,800 for 9.8 kW.
In Sydney, solar produces 3.9 kWh per kW per day, if oriented and northwards and tilted to 20-30 degrees. So this system would produce 38 kWh per day, or 13,893 kWh per year.
At 20 cents per kWh Feed in Tariff would earn $2,778 per annum.
For a cost of $10,800 and earnings of $2,778 per annum, this sees a 3.9 year payback.
But there’s a catch. Well, several..
Higher Usage Charges
If you sign up with AGL normally, you get 20% discount off usage charges for paying on-time. I think you could probably find an even better special offer from AGL somewhere, with higher discount and off all charges (like connection charges), not just usage charges.
So this means, while you are getting a great Feed-in-Tariff for your excess solar, you are paying more than you need for the electricity you use outside solar hours. If the average electricity bill is around $1,800 per year, and we assume paying a 25% premium for usage compared to what you can get, then that is $450 extra.
This reduces the annual savings/revenue from $2,778 to $2,328 per annum, and extends the payback to 4.6 years.
It’s worth noting that the Feed-in-tariff is guaranteed for 24 months, but the usage rates aren’t, from what I gather.
Alternative Panel Orientation
Not many people have roof space ideally oriented northwards for 32 panels. Let’s assume some are on flat, east or west sections, seeing on overall annual drop in production of 10%.
This reduces the annual saving or payback to $2,050 per annum, and extends the payback to 5.3 years.
Getting a Solar Edge Inverter
I really like Solar Edge, and even without shading, think it is beneficial for its great monitoring app and panel level monitoring, amongst other reasons. Solar Edge comes at a $1,900 premium, so increases the price to $12,700.
This extends the payback to 6.2 years, but is clearly optional if you are primarily motivated by economics.
How about some self consumption?
Of course, everyone uses some power during the day, like fridge operation. And also weekends, holidays, sick days etc. Let’s assume you can reduce your consumption a very small amount, of 20%. After allowing for $400 per year daily connection charges.
For the Fronius system, this sees savings/revenue of $2,330 per year after allowing for 10% reduction in annual output due to differing orientations. This sees us go back up to a 4.6 year payback.
We think you can get much higher reductions, without a battery, with rooftop solar only. Up to 60%, but without major changes, 40-50%. Read more in our article here: http://sunnyshire.org.au/5-things-you-should-do-before-getting-a-battery/
2 Year Feed in Tariff Certainty
The high feed in tariff of 20 c/kWh is only set for 24 months, so may decrease afterwards.
So, looking at it the other way, how much of your solar can you pay off in this time?
For the Fronius system, for $10,800, 90% annual output allowing for various orientations, and 20% reduction in electricity costs by using the solar but paying a premium of 25% of those usage charges, we get to $4,660 of your solar system paid off.
This means getting a 10kW now, and utilising this high feed in tariff to pay down a big part of your new solar system in the first 2 years, leaving you with $6,140 to get payback on from Year 3 to Year 25.
$6,140 for a 10kW solar system in 2020 is pretty good!
Can you get a 4 year payback for 10kW of rooftop solar even if you use no daytime electricity? Not quite, but you can get close!
The AGL Solar Savers tariff is a great one if you’d like to get big solar now, and pay down 43% of it in the first 2 years.
Note: The above calculations are not, nor intended to be exact. Electricity analysis cannot be exact, as electricity usage, tariffs and production changes constantly. But the calculation methodology described can give readers and insight on various paybacks and economics of rooftop solar, and help them make their own calculations or conclusions.
Can you get 4 year payback 10kW solar without using any daytime electricity?